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Back-pay ruling latest setback for Walmart

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David Paul Morris | Bloomberg file photo New York’s attorney general has settled a false advertising investigation at Wal-Mart, saying some store personnel were citing a nonexistent “sugar tax” on soda.

The WAshington Post

First published May 02 2012 04:41PM
Updated May 4, 2012 07:40AM

Washington • The Labor Department on Tuesday ordered Walmart to pay $4.8 million in back wages and damages to thousands of employees who were denied overtime charges, the latest in a string of embarrassments for the company over its business practices.

The department said its decision affects roughly 4,500 vision-center managers and asset-protection coordinators who worked at Walmart from 2004 to 2007. Walmart, the nation’s largest private employer, had considered those employees exempt from federal regulations requiring overtime pay but reclassified them in 2007. The government and the retailer have been negotiating the amount owed since then.

"When the issues resolved today were initially raised, we took them seriously and fully cooperated with the Department of Labor to make sure they were corrected," Walmart spokesman Greg Rossiter said.

The company said asset-protection coordinators are entitled to receive an average of $290 under the agreement, while the average for vision center managers is $2,300. Walmart was also fined $464,000 in civil penalties.

"Let this be a signal to other companies that when violations are found, the Labor Department will take appropriate action to ensure that workers receive the wages they have earned," Labor Secretary Hilda Solis said.

The decision comes as Walmart faces investigations into its Mexican operations after The New York Times reported that company executives turned a blind eye while employees allegedly bribed local officials to approve new stores.

The Justice Department has been conducting a criminal probe of the company since December to determine whether it violated the U.S. Foreign Corrupt Practices Act. Also, two Democratic lawmakers are looking into Walmart’s lobbying efforts. The Washington Post has reported that Walmart executives sat on the boards of trade organizations that have sought to amend the FCPA. The company has said it did not directly lobby on the issue.

But the reports have rattled investors and reinvigorated Walmart’s critics. New York City’s pension fund, which holds a significant stake in the company, plans to oppose the nomination of several directors to the company’s board. Union and activist groups recently protested the retailer’s efforts to expand in New York.

Earlier this week, Making Change at Walmart, backed by the United Food and Commercial Workers Union, said the Labor Department decision represented a troubling philosophy among company officials.

"The fines Walmart must pay for its overtime violations are just another side effect of the company’s growth-at-any-cost strategy," the group said in a statement. "Walmart’s top executives and the Walton heirs who own a majority of the company have shown they are willing to break the law and harm workers in the name of more profits."

This was not the first time Walmart has run afoul of federal overtime laws. In 2007, the Labor Department ordered it to pay nearly $34 million in back wages to 87,000 workers, some of whom were owed more than $10,000.

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